Halal REITs: Complete Guide To Shariah-Compliant Real Estate Investments

REITs offer a practical way for investors to gain exposure to real estate markets without needing to purchase physical properties. For those who follow faith-based investing, it’s important to determine whether REITs are halal or haram before committing funds. Shariah-compliant REITs help bridge this gap by providing halal real estate investment opportunities that are designed specifically to comply with the teachings of Islamic finance. This allows Muslim investors to grow their wealth while staying true to their values.

Best halal REITs to invest in 2025

Here is an expanded the best halal REITs list, featuring Shariah-compliant real estate investment trusts from various countries.

What are halal REITs?

Halal REITs

Halal REITs are not just real estate investments with a label, they follow strict filters to meet Islamic finance standards, making them fundamentally different from conventional REITs. Their key features include:

• Income sources must avoid haram activity. If more than 5 percent of a REIT’s revenue comes from non-permissible sources like conventional banks or casinos, it's considered non-compliant.

• Shariah screening also includes debt levels. A proper Shariah-compliant REIT usually keeps its debt-to-asset ratio under 33 percent to limit exposure to interest-based liabilities.

• Property usage is closely monitored. A mall REIT, for example, must screen tenants to ensure their businesses don’t involve alcohol, gambling, or non-halal products.

• Purification process handles mixed income. If some income is accidentally earned from non-compliant sources, it must be donated to charity through a transparent process before profits are distributed.

• Asset-backed nature adds stability. Unlike speculative equities, Islamic REITs are based on real, physical properties, which aligns with Islamic principles of asset tangibility and risk sharing.

• Halal REITs offer global exposure. Malaysia and the UAE are leaders in structured halal REITs, but new Sharia-compliant options are emerging in the UK, Indonesia, and even parts of Africa.

Are REITs halal or haram? A detailed analysis

Understanding whether REITs are halal or haram requires more than a surface-level look at real estate and dividends, it demands scrutiny of structure, contracts, and cash flow. Here is a comparative table to help clarify when REITs (Real Estate Investment Trusts) are considered halal or haram in Islamic finance:

Islamic scholars have provided guidance on the permissibility of investing in REITs, provided they adhere to Shariah guidelines. For instance Shaykh Abrarul H. Hasib says:

“REITs that invest in halal properties and avoid interest-based financing can be considered permissible.”

Dr. Mahadi Hasan, an Islamic scholar, notes:

“REITs that comply with Shariah principles, avoiding prohibited elements, offer a viable investment option for Muslims.”

Top criteria for selecting Shariah-compliant REITs

How to select Shariah-compliant REITs

Choosing the right REIT for Islamic investors requires more than just scanning for labels; here are deep, specialized insights on identifying the real best Shariah-compliant REITs.

• Check rental income purity. Make sure at least 80 percent of the rental income comes from halal sources like residential, industrial, or medical properties.

• Scrutinize tenant operations. Even if the property is halal, income becomes questionable if major tenants engage in alcohol, gambling, or conventional banking.

• Watch the debt threshold closely. Shariah REIT guidelines often cap interest-bearing debt at 33 percent of total assets, but many REITs stretch this with lease liabilities.

• Real estate usage matters. Look into how properties are used on a day-to-day basis, not just who owns them. Some “Islamic” malls host prohibited businesses in food courts.

• Look for strong Shariah boards. The halal REITs list should include funds reviewed by credible scholars or Shariah advisory firms, not just those with loose certifications.

• Avoid financial engineering traps. Some REITs use income-smoothing tricks or synthetic rental contracts that may breach Shariah boundaries even if not explicitly haram.

• Track dividend cleansing practices. Legit Islamic REITs disclose how much income needs to be purified and offer transparent procedures for donating non-compliant earnings.

Availability of Halal REITs by country

Halal REITs in the U.S.

Shariah-compliant investing is gaining momentum in the United States, with products like the SP Funds S&P Global REIT Sharia ETF providing access to real estate assets screened under Islamic guidelines. These funds carefully evaluate factors such as income sources and debt ratios to ensure full adherence to Shariah principles. For those building a global list of halal REITs, the U.S. offers a few notable inclusions worth considering.

Key examples include:

• SP Funds S&P Global REIT Sharia ETF – a leading Shariah-compliant REIT ETF that screens global real estate holdings for Islamic compliance.

• Sukoon Halal REIT – a U.S.-based private REIT structured to meet the requirements of Islamic investors, focusing on ethical property assets.

• Wahed Real Estate Portfolios – offered through Wahed Invest, these portfolios include U.S. real estate assets vetted for Shariah compliance.

• ShariaPortfolio Real Estate Fund – a halal-focused fund that may include REITs or property-related assets in line with Islamic investing criteria.

Halal REITs in the UK

In the UK, the availability of Islamic-compliant real estate investment trusts is limited. However, investors looking for halal REITs in the UK often diversify through global ETFs or choose direct property investments that meet Islamic criteria. This allows for some flexibility, especially when local offerings are narrow in scope.

Some notable halal-friendly or Shariah-compliant REIT options accessible to UK investors include:

• Wahed FTSE USA Shariah ETF – available on some UK platforms, this ETF includes exposure to real estate stocks screened for Shariah compliance.

• SP Funds S&P Global REIT Sharia ETF – a US-based ETF accessible through global brokers, focusing on halal global real estate.

• Emirates REIT – though based in the UAE, it’s often included in UK-based Shariah investment portfolios.

Halal REITs in Canada

Although Canada has seen a rise in awareness around Islamic finance, the market still lacks a robust selection of compliant REITs. As a result, individuals seeking halal REITs in Canada exposure often turn to overseas Shariah-compliant REITs or pursue locally vetted property investments aligned with ethical standards.

Some halal-friendly options accessible to Canadian investors include:

• SP Funds S&P Global REIT Sharia ETF – while U.S.-based, this ETF is available through many Canadian brokerages and meets strict Shariah screening.

• Wahed FTSE USA Shariah ETF – offers exposure to real estate-linked stocks with Shariah compliance and can be accessed through international investment platforms.

• Manzil’s Real Estate Investment Products – a Canadian Islamic fintech company offering Shariah-compliant home financing and exploring halal investment products.

Halal REITs in UAE

The UAE, and Dubai in particular, remains one of the leading hubs for Islamic financial products. REITs like Emirates REIT reflect the region’s strong commitment to faith-based investing. These Shariah-aligned vehicles cater to those seeking halal REITs in UAE that span both commercial and residential sectors, underpinned by regional regulatory frameworks. Discover the top Islamic mutual funds in the UAE, offering Shariah-compliant investment options aligned with ethical and financial principles.

Islamic REIT list in the UAE include:

• Emirates REIT – the region’s flagship Shariah-compliant REIT, investing in income-generating properties across education, office, and retail sectors.

• ENBD REIT (Islamic) – managed by Emirates NBD, this REIT follows Shariah principles and focuses on diversified UAE real estate assets.

• SEDCO Capital Real Estate Funds – while based in Saudi Arabia, these funds often invest in UAE assets and are available to regional investors.

Halal REITs in Malaysia

Malaysia is widely regarded as a global leader in Islamic finance and continues to support a well-developed REIT market. Investors can choose from various options such as Al-`Aqar Healthcare REIT and Axis REIT, both of which are committed to maintaining Shariah standards. For those exploring halal REITs in Malaysia, these trusts offer exposure to healthcare and industrial assets in a faith-compliant manner.

Prominent Shariah-compliant REITs list in Malaysia include:

• Al-`Aqar Healthcare REIT – focused on hospitals and healthcare facilities, it was one of the world’s first Islamic healthcare REITs.

• Axis REIT – specializes in industrial and commercial properties, offering strong dividend performance within Shariah guidelines.

• KLCC Property Holdings REIT – backed by Petronas, this REIT includes iconic assets like the Petronas Twin Towers and adheres to Islamic investment principles.

Halal REITs in Singapore

While Singapore’s domestic market has few Shariah-compliant REITs, it remains a strategic location for regional investors. Many looking for halal REITs in Singapore often access Malaysian options or invest in diversified global ETFs that screen for Islamic compliance. Discover the best Islamic mutual funds in Singapore, with top Shariah and halal options for ethical, faith-based investing.

Some noteworthy Shariah-aligned options connected to or accessible from Singapore include:

• Sabana Industrial REIT – once Singapore’s only Shariah-compliant REIT, it focuses on logistics and industrial assets, though its status has varied over time.

• Mapletree Industrial Trust – while not fully Shariah-certified, parts of its portfolio appeal to ethical investors seeking low-leverage and asset-backed exposure.

• Access to Malaysia-based REITs – through cross-border brokerage accounts, Singaporean investors can invest in established halal REITs like Axis REIT or Al-`Aqar.

Halal REITs in India

India’s Islamic finance space is still evolving, and REITs that meet Shariah standards are not yet widely available. However, investors searching for halal REITs in India frequently explore international markets where compliant real estate funds are more mature and accessible.

Some practical options and examples include:

• SP Funds S&P Global REIT Sharia ETF – a U.S.-based Shariah-compliant ETF accessible via global investment platforms like Interactive Brokers.

• Wahed FTSE USA Shariah ETF – offered by Wahed Invest, this ETF includes real estate-linked assets screened for Islamic compliance.

• Emirates REIT – based in the UAE but open to Indian investors through international brokerages, it offers exposure to regional commercial real estate.

If you’re also open to other halal investment options apart from halal REITs, you can find them through the brokers listed in the table below. These brokers are known for offering Islamic accounts, allowing you to continue your investment journey without worrying about going against your religious beliefs.

Boost halal REIT returns by decoding tenant contracts and capital structure

Andrey Mastykin Author, Financial Expert at Traders Union

Most beginners focus on whether a REIT simply avoids haram businesses, but the deeper layer lies in tenant screening and lease structures. A Shariah-compliant REIT might still be problematic if its major tenants generate income from non-permissible activities, even if the property itself is neutral. Dig into tenant disclosures, not just headlines. For instance, a logistics REIT might look halal at first glance but could be leasing 40% of its space to companies involved in conventional finance or alcohol distribution. The compliance risk is buried in the details most investors overlook.

Another advanced filter is to examine how the REIT manages debt and financing. Just checking if the debt ratio is within Shariah thresholds isn’t enough. Ask how that debt is structured. Are they using diminishing musharakah or murabaha-based financing? Does the REIT rely on sukuk over conventional bonds? These differences not only impact permissibility but also affect payout stability. Aligning with REITs that take care in structuring halal financing gives your portfolio both religious integrity and economic consistency.

Conclusion

Halal REITs offer Muslim investors a viable path to participate in real estate markets while adhering to Islamic principles. By focusing on compliant income sources, maintaining acceptable debt levels, and obtaining proper certifications, these investments can provide both ethical alignment and financial returns.

FAQs

Related Articles

Key Islamic Investing Rules and Limitations

Alamin Morshed

1 day ago

Halal Gold ETFs: Understanding Shariah Compliance In Gold ETF Investments

Alamin Morshed

1 day ago

Best EV ETFs To Invest In 2025

Parshwa Turakhiya

1 day ago

How To Invest in Stocks

Parshwa Turakhiya

1 day ago

Where to invest 100k in 2025 - Traders Union

Mikhail Vnuchkov

1 day ago

Team that worked on the article

Alamin Morshed

Contributor

Alamin Morshed is a contributor at Traders Union. He specializes in writing articles for businesses that want to improve their Google search rankings to compete with their competition. With expertise in search engine optimization (SEO) and content marketing, he ensures his work is both informative and impactful.

Learn about our editorial policies

Chinmay Soni

Developmental English Editor

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito

Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

Glossary for novice traders

Investor

An investor is an individual, who invests money in an asset with the expectation that its value would appreciate in the future. The asset can be anything, including a bond, debenture, mutual fund, equity, gold, silver, exchange-traded funds (ETFs), and real-estate property.

Leverage

Forex leverage is a tool enabling traders to control larger positions with a relatively small amount of capital, amplifying potential profits and losses based on the chosen leverage ratio.

Cryptocurrency

Cryptocurrency is a type of digital or virtual currency that relies on cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies operate on decentralized networks, typically based on blockchain technology.

Volatility

Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.

Yield

Yield refers to the earnings or income derived from an investment. It mirrors the returns generated by owning assets such as stocks, bonds, or other financial instruments.